Iberia, unions meet on proposal to end strike action

Reuters Staff

3 Min Read

Iberia workers protest in front of the Palau de la Generalitat over job and pay cuts, the third of three five-day stoppages planned for February and March, in central Barcelona, March 6, 2013. The loss-making airline will ground nearly 1,300 flights this week. Iberia is part of International Airlines Group, which also includes British Airways and which last week pledged to press ahead with plans to slash 3,800 jobs at the struggling Spanish airline, or 19 percent of the total, despite union opposition. The banner reads "The business for the British, unemployment for us, save Iberia". REUTERS/Gustau Nacarino (SPAIN - Tags: TRANSPORT CIVIL UNREST BUSINESS EMPLOYMENT) - RTR3ENRP

MADRID (Reuters) - Management at airline Iberia will meet union leaders on Thursday to discuss a mediator’s proposal for less harsh job and salary cuts at the Spanish flag carrier, although a deal to end strike action still seemed far off.

Iberia pilots, air stewards and ground staff have been out since Monday in the second of three five-day strikes in February and March, protesting at plans to lay off 3,807 workers and cut salaries by 20 percent in what the airline calls “a fight for survival”.

Iberia workers will meet management at 11.00 a.m. ET to discuss the proposal by the government-appointed mediator, which includes fewer job cuts and less dramatic salary reductions, though a resolution looks distant.

The loss-making airline, one half of the International Airlines Group (ICAG.L) along with profitable British Airways, is up against a shrinking Spanish economy, low-cost operators and competition from airlines that have already gone through similar restructuring processes.

Staff have already rejected an offer from the company to reduce layoffs and soften wage cuts and threatened to strike over Easter, a peak time for Spanish tourism, which is one of the only sectors growing in the depressed economy.

“Similar conditions were already rejected by unions, which leads us to believe that this type of agreement is complicated and IAG has rejected thus far the government intervention,” analysts at brokerage Sabadell Bolsa said in a note to clients.

The proposal from the mediator suggests that Iberia lay off a total of 3,141 people and cut salaries by an average of 15 percent. It also proposes compensation of 35 days’ pay per year worked, more generous than conditions offered by other companies under changes to Spain’s labor laws.

Sabadell Bolsa analysts said the terms in the proposal would increase the cost of pay-offs at Iberia to 410 million euros ($533 million) from 250 million euros.

IAG Chief Executive Willie Walsh said the company loses 3 million euros every day Iberia workers strike. The company posted a 613 million euro operating loss in 2012 and said it was determined to push ahead with job cuts at the Spanish airline.

The strikes are also damaging to Spain’s tourism sector, which accounts for 11 percent of the country’s output, as it gears up for the spring and summer season.

Spain is in the midst of its second recession since 2009 after a burst property bubble almost four years ago sapped consumer and business sentiment and left almost 6 million people out of work.

While most of the flights grounded at Iberia are domestic, other airlines have canceled flights because ground staff, including baggage handlers, are on strike. A total of 1,300 flights have been grounded this week.

($1 = 0.7692 euros)

Reporting by Robert Hetz; Writing by Clare Kane; Editing by Jason Webb